Economist's Commentary: September 26, 2008

Quick Take on the Economy: September 26, 2008

By Harika "Anna" Barlett, Senior Research Analyst, NAR Research  

GDP- Overall Economy

• The revised estimate of second quarter Gross Domestic Product (GDP) released today by the Bureau of Economic Analysis reveals that the real GDP increased at an annual rate of 2.8 percent in the second quarter of 2008. The revised estimate, based on additional source data, was revised downward from the previous estimate of 3.3 percent; however, it was much higher than the initially estimated first quarter growth rate of 0.9 percent.
• The increase in real GDP in the second quarter was primarily due to increases in exports, personal consumption expenditures, nonresidential structures, and government spending, and a decrease in imports.

University of Michigan Consumer Sentiment Index

• The University of Michigan consumer sentiment index increased in September to 70.3 from its August final reading of 63.0.
• The increase in the index reflects a decline in expected inflation from 5.2 percent in May and 4.8 percent in August to 4.3 percent in September.

What does today's data mean for REALTORS® and consumers?

• Increasing exports and decreasing imports resulted in a higher GDP growth in second quarter, compared to the first quarter of the year. Lowered inflation expectations contributed to an increase in consumer sentiment in September.
• Recent developments in financial markets may have a negative impact on GDP until uncertainties and liquidity issues are resolved. Currently the Congress and Administration are focusing on the restoration of liquidity and stability in the financial system, and on presenting a freeze in the flow of credit into the mortgage market. A recovery in the housing market will lead a recovery in overall economy. Additional information on NAR's economic views can be found here.

Daily Forecast Update

• NAR's monthly official forecast as of September 9th (15K PDF)
• GDP Q3: 1.3%
• GDP Q4: 0.6%
• Unemployment rate by year end: 6.3%
• Average 30-year fixed mortgage rate in December: 6.1%
• Average 30-year fixed mortgage rate by mid-2009: 6.5%
• The next Fed policy change: a rate hike in late April 2009.

This is one in a series of commentaries by the Research staff of the National Association of REALTORS®. Read more commentaries >

Comments? Questions? E-mail NAR Research.

NAR members, learn how you can add this commentary to your Web site, blog, or newsletter. Read more >